Photo by Todd Quackenbush on Unsplash
If blockchain represents a fundamental reimagining and reorganization of the internet, few things are as ripe for disruption as “the internet’s original sin” itself: advertising.
Online advertising today is a murky, fraud-filled race to the bottom. It is an industry which has demonstrated unbelievable innovation in how to target, but utter laziness and virtual contempt for our intelligence in what to target us with. Ad blocking continues to surge, major brands are slashing their budgets, and even those in the ad and marketing tech space find it hard to defend.
The tokenized economies of companies in the blockchain movement offers an alternative. Airdrops, in which companies distribute — for free — some number of their digital tokens directly to users — represent a fundamentally different approach to the challenge of attracting audience attention.
Rather than paying a middleman to serve an audience some type of content they hate so much they’re willing to go actively seek out solutions to block it, airdrops allow companies to provide those same potential users with a form of currency to participate in and start discovering the value of their community.
What’s An airdrop?
For those who don’t follow crypto like frenzied pit traders, an airdrop is a disbursement of a company’s tokens directly into the digital wallets of some pre-determined group of people.
Airdrops are a mechanism to seed community activity by giving members the token that represents that community’s currency and unit of exchange. Companies who have been successful fundraising in private markets but who have regulatory concerns around public sales are using airdrops as an alternative way to get their tokens into the interested public’s hands. Companies that are earlier in their fundraising are increasingly taking a more tactical approach, using airdrops as a mechanism for user acquisition.
As companies pursue token sales, one of the main vectors of competition for investor interest is the size and strength of their community — expressed in metrics like the size of their Telegram group. Of course, anything that can be growth hacked will be growth hacked, and so companies have started using token airdrops as the carrot to get people to sign up and take interest.
The easy critique of this trend would be some combination of 1) the people signing up for your community don’t really care about the community — they just want free tokens; and/or 2) it seems silly for investors to base decisions on something like the size of a social community, which seems like a vanity metric.
Both of these critiques, however, would fail to take into account that with tokens and blockchain, we’ve entered into a categorically different entrepreneurial era.
Economies, Not Companies
The majority of today’s blockchain companies are not building companies, per se. Instead, they’re building online economies. (For maybe the best discussion of this, listen to the conversation between Bancor co-founder Eyal Hertzog and Kevin Rose on Block Zero)
The difference is significant. Companies seek to increase profit. Economies seek to increase the value and volume of exchange within the community. Companies face an uncomfortable tension between shareholders who want to maximize profit and customers who want to maximize value. In an economy, increase in the value and quality of exchange increases the value of the currency and the value of the currency holders, eliminating that tension.
The difference is made possible by tokenization. Tokens allow members of a community to become full economic actors, with a means of exchanging value. This simple fact is why the “communities” we discuss in crypto are something fundamentally different than a company’s social media in years past — even if they use the same channels. When people buy a company’s tokens or trade goods and services with one another using those tokens, they’re not just “following” a company, but investing in the health of an economy.
A Different Take On Advertising
In this context, airdrops as advertising start to feel not only more logical, but actually seem to better align the fundamental value exchange that advertising is supposed to represent.
Airdrops as user acquisition do three important things:
- They allow the company to affirm directly to the prospective user that they are valuable enough to them to actually pay for their attention.
- They allow the company to pay the user directly for their attention, rather than go through some third party with a tenuous claim at best on that user
- They give the company a chance to provide prospective users with the means (in the form of currency) to start exchanging and deriving value from the community
Think about how different this is than current modalities of digital advertising.
Advertisers’ methods of showing consumers they’re interested in them today takes pages straight from the stalker playbook, creepily following them around the web and leveraging data that users aren’t particularly sure those advertisers should have access to to try to appeal to them.
Meanwhile, it’s not those prospective users getting paid for being valuable, but the massive and diverse network of intermediaries who collect and distribute that personal data.
And finally, when the advertisers do have a chance to finally to reach those users, they do it with generic, generally-stupid content that actually has the nerve to interrupt, delay and disrupt the experiences and content that those people are actually interested in.
Recapping the state of things like that, it’s hard not to be excited about the prospects of something like Airdrops to fundamentally re-align the value being exchanged between consumers who have attention to give, and companies who want it.
The Genie Is Out Of The Bottle
Even in an industry with blockchain’s rapid pace of change, these are early days for experimenting with airdrops-for-acquisition. Almost inevitably, someone will find a way to do it sleazily, and give the chorus of critics more fodder for Ponzi scheme accusations.
At the end of the day, however, once the genie of companies going around middlemen to pay consumers directly for their attention is out of the bottle, it will be very, very hard to get back in, and the current advertising establishment will pay the cost.
Good riddance. Online advertising has gotten us nothing but dubious data practices, interruptive, annoying experiences, and an entire new media structure optimized to keep us addicted to trivialities. It’s about time we built something better.